Who’s afraid of the big, bad
Blue Wolf?
Sightings from The Catbird Seat
~ o ~
April 26, 2009
Bill, Aides Are Pen$ion Pals;
Ex-Thompson Bigs' Firms Nab Fund
Deals
By SUSAN EDELMAN and GINGER ADAMS OTIS
Three former deputies to city Comptroller Bill Thompson now own or work at firms that earn millions of dollars in fees to invest the pension funds he oversees, The Post has found.
Government watchdogs blasted the ex-employees for seemingly exploiting their connections to get high-paying jobs and bring government cash to their private businesses.
Two of Thompson's former top pension managers, Josh Wolf-Powers and Adam Blumenthal, quit their city jobs and founded Blue Wolf Capital Management in 2005.
The private equity firm landed contracts to invest $63 million of city pension funds - and will collect at least $1.2 million in fees, officials said.
Fees paid to firms that manage pension investments have soared in the past five years from under $100 million to $400 million a year, said a source close to the pension funds.
"They're huge moneymakers," said a source familiar with the deals.
Thompson was unavailable for comment, but his spokesman said Wolf- Powers and Blumenthal waited more than a year before seeking business with the pension funds, as city rules require, so "there was no conflict."
Another of Thompson's closest aides, Horatio Sparkes, the ex- deputy comptroller for pension funds, left in 2006 to join Yucaipa Companies, an investment firm led by supermarket magnate and Bill Clinton buddy Ron Burkle.
Yucaipa already had a contract to invest $170 million in 2003, according to city documents. The company got new contracts last year to invest another $360 million for four city pension funds, documents indicate.
While total payments to Yucaipa were not disclosed, records show the company has raked in $9.5 million in fees from the $347 million it invests for the city's biggest pension fund - NYCERS.
Even if the deals follow the letter of the law, they reek of preferential treatment, watchdogs say.
"They use their insider knowledge and past relationships to gain an upper hand and make a wad of cash," said Dick Dadey, executive director of Citizens Union.
A Yucaipa spokesman said that the firm didn't make an offer to hire Sparkes, who joined its Manhattan office, until he quit the Comptroller's Office in 2006 - and that Sparkes wasn't allowed to work on accounts related to the city for over a year.
Thompson's office has come under scrutiny in a widening pay-for- play probe by state Attorney General Andrew Cuomo.
Cuomo and the Securities and Exchange Commission last month indicted political adviser Hank Morris for allegedly steering state pension-fund business to investment firms in exchange for kickbacks. Morris denies the charges.
The state scandal was linked to Thompson's office last week, when The Post revealed that Morris had pocketed a placement fee on an $85 million deal between NYCERS and Quadrangle, an investment firm headed by Steven Rattner, now the chief of President Obama's auto- bailout task force.
In addition, Wolf-Powers, Thompson's former managing director for private markets, was quoted as telling Rattner that any investment firm doing business with the city needs a "placement agent," a middleman who charges a finder's fee.
Wolf-Powers has said he never told Rattner to hire Morris.
But Blue Wolf did not use a placement agent in 2008, when it landed contracts to invest $63 million of the city's pension money, the Comptroller's Office confirmed. Thompson's spokesman said the Blue Wolf investment was "reviewed and recommended" by two private- equity consultants hired by the pension funds.
Before getting the contracts, Blue Wolf donated $4,950 to Thompson's campaign for mayor in July 2007. At the same time, Blumenthal, Thompson's former first deputy comptroller and chief financial officer, gave $4,050.
FRIENDS IN HIGH PLACES
Three former deputies of city Comptroller Bill Thompson have gone on to lucrative careers
in private equity, investing pension money they once oversaw.
Josh Wolf-Powers - City comptrollers managing director for private markets (2003-2005)
Adam Blumenthal - First deputy comptroller and chief financial officer (2002-2005)
Blue Wolf lands contracts to invest $63 million in city pension funds in 2007 and 2008. It earns the firm at least $1.2 million in fees.
Wolf-Powers and Blumenthal leave the Comptrollers Office in 2005 and form Blue Wolf Capital Management, a private equity firm.
Blue Wolf donates $4,950 to Thompsons campaign for mayor in 2007; Blumenthal donates $4,050.
Yucaipa receives a contract in 2004 from NYCERS to invest part of its funds and earns $9.5 million in fees. In 2008, it lands other contracts and now handles $530 million in city pension-fund investments.
Until 2005, Yucaipas contacts in the City Comptrollers Office are Josh Wolf-Powers and Adam Blumenthal.
Bill Thompson City comptroller - Oversees $80 billion of city pension funds, including the New York City Employees Retirement System (NYCERS).
In 2006, Sparkes joins Yucaipa Companies, a private equity firm founded by Ron Burkle.
In January 2009, Wolf-Powers and Blumenthal hire Mike Musuraca, a NYCERS pension board member who had voted to approve the Blue Wolf investment contract.
Horatio Sparkes - The deputy comptroller for pension funds (2002- 2006)
Donated $500 to Thompson for Mayor in 2008.
(c) 2009 The New York Post. Provided by ProQuest LLC. All rights Reserved.
A service of YellowBrix, Inc.
http://www.americanchronicle.com/articles/yb/129165220
March 15, 2009
Bill Clinton severs ties with Yucaipa: report
NEW YORK (Reuters) – Former President Bill Clinton has severed his connections to Ronald Burkle's Yucaipa Cos. and will not receive a payment once estimated to be up to $20 million, the Wall Street Journal reported on Sunday, citing a person familiar with the matter.
The Journal said Clinton decided not to claim additional money from Yucaipa earlier this year.
It said people familiar with the matter had thought last year that the payment could have been as much as $20 million. However, the size of the possible payment might have fallen because of the recent economic turmoil.
Clinton started distancing himself from Yucaipa, a private equity firm run by his friend Burkle, in 2007 because Hillary Clinton was planning a run for the Democratic presidential nomination, according to the report.
Hillary Clinton won U.S. Senate approval as secretary of state in January despite renewed Republican concerns about potential conflicts of interest created by her husband's foreign fund-raising.
Spokesmen for Clinton and Yucaipa could not be immediately reached for comment.
(Reporting by Michael Erman; Editing by Kim Coghill)
http://news.yahoo.com/s/nm/20090316/pl_nm/us_clinton_yucaipa_1
"BLUE WOLF CAPITAL MANAGEMENT AND PAY-TO-PLAY POLITICS" - (An Exhibit in CV05-00030 - U.S. Dept of Justice vs Harmon)
Thursday, June 11, 2009 6:13 AM
From:
Bobby N. Harmon, CPCU
To:
"President Barack Obama" <president@whitehouse.gov>, "U.S. Attorney General Eric Holder" <AskDOJ@usdoj.gov>, "David Farmer" <farmerd001@hawaii.rr.com>, "Steven Guttman" <sguttman@kdubm.com>, "Carol K. Muranaka" <ustp.region15@usdoj.gov>, "Judge David A. Ezra" <theresa_lam@hid.uscourts.gov>, "Judge Kevin S.C. Chang" <shari_afuso@hid.uscourts.gov>, "Judge Barry M. Kurren" <tammy_kimura@hid.uscourts.gov>, "Securities & Exchange Commission Enforcement Division" <enforcement@sec.gov>, "U.S. Treasury Dept. Office of Inspector General" <hotline@oig.treas.gov>, "Office of Inspector General US Dept of Justice" <oig.hotline@usdoj.gov>, "Executive Office for U.S. Trustees" <ustrustee.program@usdoj.gov>, "Judge Robert Faris" <hib@hib.uscourts.gov>, "SEC Office of The Inspector General" <oig@sec.gov>, "Hawaii State Bar Association" <info@hsba.org>, "Charles Goodwin" <HONOLULU@FBI.GOV>, "Hugh Jones" <hugh.r.jones@hawaii.gov>, "Insurance Division Fraud Branch" <insfraud@dcca.hawaii.gov>, "Lawrence Reifurth" <dcca@dcca.hawaii.gov>, "Linda Lingle" <governor.lingle@hawaii.gov>, "Jo Ann Uchida" <rico@dcca.hawaii.gov>, "Office of Inspector General Civil Rights Complaints" <inspector.general@usdoj.gov>, "Mark Bennett" <hawaiiag@hawaii.gov>, "American Arbitration Association" <webcase@adr.org>, "Judith Neustadter" <Judy@tiki.net>, "Benjamin J. Cayetano" <bjcayetano@aol.com>, "Lokelani Lindsey" <lindseyl001@hawaii.rr.com>, "ACLU Hawaii" <office@acluhawaii.org>, "All Representatives" <reps@Capitol.hawaii.gov>, "All Senators" <sens@Capitol.hawaii.gov>, "Andrew Walden" <hfpeditor@email.com>, "Aon Insurance Managers" <mike_coulter@agl.aon.com>, "Arthur Rath" <imua@spamarrest.com>, "Benjamin Kudo" <bkudo@imanakakudo.com>, "Bradley Tamm" <btamm@hawaii.rr.com>, "Carl Morton" <ethics@hawaiiethics.org>, "Charles Hurd" <mcp@mediatehawaii.org>, "David Shapiro" <volcanicash@gmail.com>, "Dee Jay Mailer" <ksinfo@ksbe.edu>, "J C Shannon" <Hapa1234@aol.com>, "James B Nicholson" <jamesbnicholson@aol.com>, "James B. Farris" <Farrisj@adr.org>, "James Cribley" <jcribley@caselombardi.com>, "James Wriston" <jwriston@awlaw.com>, "Jeffrey Watanabe" <jwatanabe@wik.com>, "Jim Dooley" <jdooley@honoluluadvertiser.com>, "Joe Moore" <news@khon2.com>, "John D. Finnegan" <info@chubb.com>, "John Goemans" <wip@kamuela.com>, "Judson Witham" <jurisnot2@yahoo.com>, "Ken Conklin" <ken_conklin@yahoo.com>, "Lyn Flanigan Anzai" <lflanigan@hsba.org>, "Margery Bronster" <info@bchlaw.net>, "Marsh Affinity Group" <prosecure@marshpm.com>, "Michael N. Tanoue" <mtanoue@paclawgroup.com>, "Michelle Tucker" <michelle@sterlingandtucker.com>, "Nathan Aipa" <nathan@pitluck.com>, "Paul Alston" <palston@ahfi.com>, "Randall Roth" <rroth@hawaii.edu>, "Rick Daysog" <rdaysog@honoluluadvertiser.com>, "Robert Bruce Graham" <bgraham@awlaw.com>, "Robin Campaniano" <aigh001@aighawaii.com>, "Samuel P. King" <leslie_sai@hid.uscourts.gov>, "William K Slate" <Websitemail@adr.org>, "Jim Terrack" <tnthawaii@aol.com>, "Rocco Sansone" <rocco.c.sansone@marsh.com>, "Ted Pettit" <tpettit@caselombardi.com>, "Laura Thielen" <dlnr@hawaii.gov>, "Vaughn & Lynda Robinson" <ronpaulslcutah@yahoo.com>, "Rebecca Christie" <rchristie4@bloomberg.net>, "Catbird" <the-catbird@hotmail.com>, "James Duca" <jduca@kdubm.com>, "Ian Lind" <diary@ilind.net>, "Roy F. Hughes" <hthughes@hawaii.rr.com>, "Malia Zimmerman" <Malia@hawaiireporter.com>, "Jack Cashill" <JCashill@aol.com>, "Marshall Chriswell" <mc@whistleblowers.org>, "Laser Haas" <laserhaas@msn.com>, "Lucy Komisar" <lkomisar@msn.com>, "Democrats.com" <activist@democrats.com>, "Debra Sweet" <debrasweet@worldcantwait.org>, "Jane Kirtley" <kirt001@umn.edu>, "John Jubinsky" <Jube@tghawaii.com>, "Yamil Berard" <yberard@star-telegram.com>, "Global Exchange" <communications@globalexchange.org>, "William K. Black" <blackw@umkc.edu>, "Carole Williams" <cjwms@up.net>, "Susan Tius" <STius@rmhawaii.com>, "Human Rights in China" <hrichina@hrichina.org>, "Michelle Malkin" <writemalkin@gmail.com>, "Heather Vsn Doren" <heather.vandoran@yahoo.com>, "Phil J. Berg" <philjberg@obamacrimes.com>, "Amnesty International U.S.A." <aimember@aiusa.org>, "Michael Moore" <bailout@michaelmoore.com>, "California Anti-SLAPP Project" <info@casp.net>, "Thomas Fitton" <info@judicialwatch.org>, "Ron Branson" <VictoryUSA@jail4judges.org>, "ACLU of Kentucky" <info@aclu-ky.org>, "ACLU Online" <ACLUOnline@aclu.org>, "mole333" <mole333@gmail.com>
Thursday, April 23, 2009
NYC FOCUS: Blue Wolf Capital Management and Pay-to-Play Politics
There is a new and expanding scandal in town. And I am realizing it reaches through many aspects of NYC government...and is a further illustration of what is wrong with NYC.
I recently had a dust up here on DG about developer money in City Council elections centering on a candidate named Brad Lander. In resulting discussions both on and off line, I realized how in people's blind focus on developers, either pro- or anti-, what is ignored is the massive conflict of interest that permeates NYC politics where corporate interests (developers and others) donate so much money to politicians that it often determines who wins, and those very same corporate interests get major favors from politicians.
I also recently had a confrontation with Marty Markowitz at an IND meeting where I took exception to being called "anti-development" because my opposition is NOT to development per se, but to the overwhelming influence of developers in NYC politics and the lousy policies it buys them that hurts the community but lines the pockets of developers. An example is the city actually BUYING the land for Bruce Ratner so he can build his Atlantic Yards project at the same time fire houses are being closed and schools getting over crowded thanks to funding cuts.
Marty Markowitz, with his typical faux-amiable guffaw, simply said, "I disagree and we can agree to disagree."
Of course he failed to address my actual concerns at all. And the recent scandal revealed by Andrew Cuomo just makes my point very well in a broader context. This scandal involves pension funds, politicians, political favors and the disgusting way in which corporations fatten themselves through their bought politician pets.
Josh Wolf-Powers, a former aide to Comptroller Bill Thompson, is the guy who advised Steven Rattner’s company, the Quadrangle Group, to hire the now-indicted Hank Morris as its placement agent. True News from ChangeNYC points out that this was the same year Josh Wolf-Powers the Comptroller's found the company Blue Wolf Capital Management.
And it was Blue Wolf Capital Management that was the focus of a discussion here on Daily Gotham because they were a major donor to Brad Lander and a Lander supporter was defending Blue Wolf.
Let me be clear, this does not mean Brad has done anything wrong. Or that Blue Wolf donating to Brad is illegal. What it means is that people who defend Blue Wolf as an acceptable political patron is missing the whole point of conflict of interest and pay-to-play. Blue Wolf is a company, founded by former government employees, who donate to political candidates AND who have as an investment strategy the involvement of government agencies in turning around companies. From Blue Wolf Capital's website:
Many middle-market private equity firms shy away from companies for which the federal government, federal agencies, or state or local governments or government entities, are major factors in the value chain.
Government contractors and companies in industries driven by government procurement, policies or subsidies have a set of common issues which we specialize in addressing:
Long sales cycle: Sales cycles in the public sector often are long and relationship-driven. A private equity owner working in these markets must have the patience to understand the sales cycle, and the relationships and relationship-management experience to enhance a company’s results. We have these relationships and skills.
Political risk: Understanding value in certain companies requires the ability to underwrite political risk. In the public sector, the difference between rhetoric and reality can be large, and the competing demands of policy and operations can create apparent contradictions. Few middle-market private equity firms have the experience to assess and value these risks; we believe that our experience in the public sector gives us this experience.
Unusual financing requirements: Federal, state and local governments and governmental agencies often defer or delay payments, resulting in unpredictable and lumpy cash flows. This can lead to unusual financing challenges; we have experience in structuring around these challenges.
In and of itself this could be a reasonable investment strategy. EXCEPT that this is being done by people with government connections who donate large amounts of money to politicians who may directly or indirectly be involved in governance issues that may affect their investments, AND one of their founders is near the center of this major scandal Andrew Cuomo is investigating. Again, Josh Wolf-Powers is THE GUY who hooked up Rattner and Hank Morris, the two people at the center of this scandal.
To quote True News from ChangeNYC:
Blumenthal and Wolf-Powers’ Blue Wolf Capital Management, like Hank Morris’ firm Searle, specializes in drumming up pension fund business for private investors. Under a section entitled “Government in the Value Chain”, Blue Wolf’s company website states, “Many middle-market private equity firms shy away from companies for which the federal government, federal agencies, or state or local governments or government entities, are major factors in the value chain. Government contractors and companies in industries driven by government procurement, policies or subsidies have a set of common issues which we specialize in addressing.” According to its website Blue Wolf is particularly well-suited for government procurement work, because “each member of our investment committee has served as a public official.”
Political donations often create conflicts of interest and it is those conflicts of interest, not just developers, that are a corrupting influence. And in many cases the "no developer money" pledge in no way removes such potential conflicts of interest. "No corporate donations" pledges go further in avoiding these conflicts of interest, though not always completely.
Is it a conflict of interest for a person fishing for a judgeship to make political donations to the very people who can offer him an appointed judgeship? Of course it is and it actually is illegal to buy a judgeship. This kind of conflict of interest has dogged Brooklyn judges, landing some in jail and damaging the chances of others when they later (after failing to buy a judgeship) ran for a judgeship.
And is it a conflict of interest when a company whose stated purpose is to buy undervalued companies and use negotiations with government to secure a better financial situation for those companies to donate to political candidates who may very well be part of the government making decisions that will turn that company a profit? Of course it is a conflict of interest. But this conflict would be ignored under the knee jerk "no developer money."
And it is a conflict of interest for Bill de Blasio (running, rather cynically perhaps, for NYC Public Advocate) to take gobs of money from the billboard industry right before advicating that NYC should: "Leave billboards ALONE!" It is amazing how $8000 from the industry got de Blasio's advocacy skills so active advocating for that same industry. Yet this is not developer money influencing a politician and would be missed in the "no developer money" pledge.
To see who a politician is beholden to, look to where their donations come from, keeping in mind that a name on a donor list may not reveal their industry without a search. It is worth noting that developers donate to Melinda Katz so much yet, along with lawyers, still hedge their bets by donating to Weprin and Yassky as well. It is worth noting that Weprin also gets donations from the garage and horse carriage industries and this seems in line with his legislative stands. It is worth noting that Vito Lopez is showered with money from developers and, go figure, chiropractors. Of course the people least beholden are the ones who bring in money mainly from average folks with little to spare, so they bring in the least money and so have the toughest time winning. Norman Siegel, running for Public Advocate, is so scrupulous about donors and so scrupulous about not being influenced by big money that it is hard for him to raise money. The people whose best interests are to elect Norm Siegel don't have as much money to donate as those whose best interests are in electing a far less scrupulous candidate.
Political donations, government jobs, government contracts, pension funds and investment agencies, all tied together. It is this corrupt combination that all too often determines elections and that all too often determines government policy. And my discussions with Marty Markowitz showed that he either doesn't care about or doesn't understand the problem. My discussions with supporters of Brad Lander who defended Blue Wolf in particular show that his supporters don't understand or don't care about this problem either. And yet it is at the heart of what is wrong with NYC politics.
Political contributions from companies who want politicians to advocate for their industry is common practice. Blue Wolf's top execs donate gobs of money to many politicians (their donation to Brad Lander just happened to be the one that caught my attention) and then Blue Wolf brags about using their political connections to make a buck for their investors. That is blatant conflict of interest...and often (though not always, as Cuomo's investigation may illustrate) is perfectly legal. And yet it is also, in a very real sense and even when not outright illegal, corruption. Well accepted and legalized corruption is still corruption. It means money buys influence in a pretty blatant way. And although developers are the biggest donors and expect the biggest returns on their donations, it is a problem throughout the system. Blue Wolf demonstrates that amply.
Will politicians now be giving donations from Blue Wolf back? I bet this will be one of the ways politicians will try to distance themselves from the scandal. But that doesn't change the fact that they actively and willingly participated in a pay-to-play political system that encourages this very thing. And many of them proudly defend their participation, as does Marty Markowitz right to my face, and as did some of Brad Lander's supporters right here on Daily Gotham.
posted by mole333 | 2:48 PM
http://moleprogressive.blogspot.com/2009/04/nyc-focus-blue-wolf-capital-management.html
* * * * *
June 11, 2009
RE: CV05-00030 - U.S. Dept. of Justice vs. Harmon - Witness Joshua Gotbaum - (http://www.zoominfo.com/Search/ReferencesView.aspx?PersonID=1574797)
Dear President Obama, Attorney General Holder, Trustee Farmer, Mr. Guttman, Ms. Neustadter, Judge Kevin Chang, Judge David Ezra, and All Concerned:
I am adding the subject Exhibit as it relates to this lawsuit which violates my Constitutional Rights of Free Speech and a Fair Trial, and Federal and Hawaii Anti-SLAPP statutes.
You will find related information on-line at:
http://www.kycbs.net/911-COVERUP.htm
http://www.kycbs.net/AIPAC.htm
http://www.kycbs.net/Allied-World-Assurance.htm
http://www.kycbs.net/Aloha-Air.htm
http://www.kycbs.net/Cesspool.htm
http://www.kycbs.net/ChubbGroup.htm
http://www.kycbs.net/CITIGROUP.htm
http://www.kycbs.net/Confessions.htm
http://www.kycbs.net/Developers.htm
http://www.kycbs.net/Hawaiian-Air.htm
http://www.kycbs.net/Yucaipa.htm
http://www.kycbs.net/CV05-00030-Witness-Anzai-Earl.htm
http://www.kycbs.net/CV05-00030-Witness-Anzai-Lyn.htm
http://www.kycbs.net/CV05-00030-Witness-Clinton-Bill.htm
http://www.kycbs.net/CV05-00030-Witness-Faris-Robert.htm
http://www.kycbs.net/CV05-00030-Witness-Farmer-David.htm
http://www.kycbs.net/CV05-00030-Witness-Gotbaum-Joshua.htm
http://www.kycbs.net/CV05-00030-Witness-Ing-Douglas.htm
http://www.kycbs.net/CV05-00030-Witness-Matsumoto-Colbert.htm
http://www.kycbs.net/CV05-00030-Witness-Paulson-Henry.htm
In view of all the facts that I have presented in this and hundreds of other Exhibits and witness descriptions, it is beyond comprehension that former Attorney General Alberto Gonzales; Assistant U.S. Trustees Curtis Ching, Gayle Lau and Carol Muranaka; Judges Eden Hifo (fka Bambi Weil), Kevin Chang, David Ezra, Barry Kurren, Lloyd King and Robert Faris; Trustees Mary Lou Woo, James Nicholson and David C. Farmer; American Arbitration Association arbitrator Judith Neustadter Fuqua, attorney Steven Guttman, and others, can still claim that they were non-conflicted, fair, impartial, and unbiased in this case.
Mr. Farmer and Mr. Guttman, in spite of all this factual evidence (not just "political opinions" or "conspiracy theories" as you have previously alleged), I am again asking that we attempt to reach a global settlement of this matter through confidential negotiation or mediation rather than continuing these costly and seemingly-endless court proceedings.
However, if you and your insurance carriers are still not willing to attempt to negotiate or mediate a settlement, then I ask that you perform your mandated review of this new Exhibit in accordance with Judge Ezra's Order, and advise me if you find it contains any so-called "protected subject matter", and whether or not you intend to OBJECT to my filing a Motion to reopen this case.
I respectfully request your immediate reply. If I do not receive a response from you or your insurance carrier within 15 days, I will assume that you have found no "PSM" in these updated pages, and that you will NOT file any objections to my Motion.
Very truly yours,
Bobby N. Harmon, CPCU, ARM
Additional References:
http://www.kycbs.net/Apartheid-Hawaii.htm
http://www.kycbs.net/Broken-Trust-Book.htm
http://www.kycbs.net/Confessions.htm
http://www.kycbs.net/Freedom-To-Sing.htm
http://www.kycbs.net/JUSTICE.htm
http://www.kycbs.net/Lost-Generations.htm
http://www.kycbs.net/RICO-in-Paradise.htm
http://www.kycbs.net/SLAPP.htm
http://www.kycbs.net/Whistler.htm
http://whistlersongs.blogspot.com
http://www.zoominfo.com/Search/ReferencesView.aspx?PersonID=912950374
November 13, 2008
Clinton officials to lead
3 departments' transition
New York, Nov 13, IRNA
US-Transition-The New York Times
President-elect Barack Obama on Wednesday named two former Clinton White House officials, Joshua Gotbaum and Michael J. Warren, to oversee the new administration's takeover of the Treasury Department as it manages the still-evolving $700 billion financial rescue plan.
Gotbaum, 57, the son of the New York labor leader Victor Gotbaum, worked briefly in the Carter administration before becoming a protege of the investment banker Felix G. Rohatyn at Lazard Freres & Company, The New York Times said.
He worked in the Clinton administration as an assistant secretary of defense, an assistant secretary of Treasury and controller of the Office of Management and Budget.
In a May 2001 essay for Government Executive magazine, Gotbaum reflected on the successes and limitations of bringing private-sector financial management to government programs.
"There is a debate on the standards for social insurance, national parks and other 'stewardship assets,'" he wrote.
"Here it is not at all clear that private sector standards make sense: Rather than auditing acres at Yosemite and exhibits at the Smithsonian, wouldn't resources be better used to audit cash at the Housing and Urban Development Department?"
After Sept. 11, 2001, Mr. Gotbaum ran the September 11th Fund, a charity established to help people and businesses hurt by the terrorist attacks.
He later oversaw the restructuring of the bankrupt Hawaiian Airlines.
In 2006, Gotbaum became an operating partner of the private equity firm Blue Wolf Capital Management. There, he helped restructure Platform Learning Inc., a company acquired by Blue Wolf that provides tutoring services under the No Child Left Behind program.
Warren, 41, the other leader of the Treasury review team, is a Rhodes scholar who has worked as a strategic consultant to technology and finance companies for McKinsey & Company. In the Clinton administration, he was executive director of the National Economic Council.
He is the chief operating officer of Stonebridge International, a business consulting and government relations firm co-founded by Sandy Berger, President Bill Clinton's national security adviser. http://www.stonebridge-international.com/pages/page01b.html
The firm's Web site says it has helped a metals manufacturer navigate Russian politics and bureaucracy, a retailer win approval for an acquisition in China and a chemical company with European safety and environmental regulations.
The Obama transition team named two more former Clinton administration officials, Thomas E. Donilon and Wendy R. Sherman, to head the transition for the State Department.
Mr. Donilon, 53, assistant secretary of state for public affairs and State Department chief of staff under Mr. Clinton, is a partner in the law and lobbying firm O'Melveny and Myers. He is no longer a registered lobbyist, but he worked as one until 2005 for Fannie Mae, the government-backed mortgage giant whose failure this year contributed to the financial crisis.
Donilon has worked for decades at the top levels in Democratic presidential campaigns.
Ms. Sherman, 59, was counselor for the State Department and special adviser to Mr. Clinton on North Korea. She is a principal of the Albright Group and Albright Capital Management, consulting and investment firms founded by former Secretary of State Madeleine K. Albright.
Obama's transition team also named two Clinton officials, John P. White and Michele A. Flournoy, to oversee the takeover of the Defense Department.
Mr. White, 71, was deputy secretary of defense from 1995 to 1997 under President Clinton and assistant secretary of defense from 1977 to 1978 under President Jimmy Carter.
A former Marine lieutenant, he is a lecturer at the Kennedy School of Government at Harvard and a senior partner in Global Technology Partners, a firm founded by William J. Perry, defense secretary under Clinton that invests in military and technology companies.
Ms. Flournoy, 47, a deputy assistant secretary of defense for strategy and threat reduction in the Clinton administration, last year co- founded the nonprofit Center for a New American Security, a research organization closely associated with Obama's foreign policy team.
Last year, she helped write a paper urging a shift to "conditional engagement" in Iraq depending on the actions of the Iraqi government.
http://www2.irna.ir/en/news/view/menu-239/0811133872171638.htm
See also: http://www.voy.com/129276/1263.html
~ ~ ~
MESSAGE SENT TO PRESIDENT-ELECT OBAMA’S TRANSITION TEAM
November 14, 2008
URGENT MESSAGE:
Joshua Gotbaum is unfit to serve in President-elect Barack Obama's transition team.
For some of the many legitimate reasons why, please see:
http://www.kycbs.net/CV05-00030-Witness-Gotbaum-Joshua.htm
http://www.kycbs.net/CV05-00030-Witness-Obama-Barack.htm
http://www.kycbs.net/JUSTICE.htm
Mahalo!
Bobby N. Harmon
June 18, 2007
The Nature Conservancy and Finch Paper Announce Adirondack Woodlands Transaction
161,000-acre Purchase Includes Working Forest Agreement
Keene Valley, NY — June 18, 2007 — The Nature Conservancy (“TNC”) and paper manufacturer Finch Paper Holdings LLC (“Finch Paper”) today announced that TNC has purchased all 161,000 acres of Finch’s forestland in the Adirondacks. The transaction includes an historic 20-year Working Forest Agreement that will ensure a fiber supply to the Glens Falls mill and continue to support the jobs associated with timber harvesting.
The Nature Conservancy, a non-profit conservation group that has been working locally in the Adirondacks for 36 years, purchased the 161,000-acre property for $110 million, or $683/acre. The purchase was financed in part through loans from the Open Space Conservancy, the land acquisition affiliate of the Open Space Institute, and from John Hancock Life Insurance Company. TNC will launch a major private fundraising campaign for this landmark purchase.
The land sale was made concurrently with the close of Finch Paper Holdings LLC’s acquisition of Finch, Pruyn & Co., Inc. Finch Paper Holdings LLC is owned by an investor group led by Atlas Holdings LLC (“Atlas Holdings”) and Blue Wolf Capital Management LLC (“Blue Wolf”). Richard Carota, previously CEO of Finch, Pruyn, is an investor in the new company and will continue as CEO of Finch Paper.
On the forestlands, TNC will take responsibility for local taxes, and much of the forests will continue to supply fiber to the Finch Paper mill, which employs approximately 850 people. This fall, TNC will renew the year-to-year recreational leases on the property for the upcoming year. In keeping with its conservation mission, TNC’s objectives are to preserve the property’s biological diversity while maintaining working forests and seeking to enhance public recreational opportunities.
“We came to know these lands when Finch, Pruyn contracted with the Adirondack Chapter in 2001 to conduct an extensive ecological inventory as part of the company’s ‘green forestry’ certification. We discovered extraordinary biological richness, inspiring TNC to step up and play the leading role in this property’s future,” said Michael Carr, Executive Director of The Nature Conservancy’s Adirondack Chapter, based in Keene Valley.
“The property is linked to the Adirondack economy and our way of life here. Over the next 12 - 18 months, we look forward to working with communities, recreational leaseholders, and other stakeholders to chart the course toward achieving our critical conservation objectives in ways that are compatible with sustainable forestry and responsible recreational uses,” Carr added.
“We’re extremely pleased to have reached an agreement that will continue the proud multi-use traditions of this land for years to come,” said Andrew Bursky, chairman of Atlas Holdings, which owns four paper mills and nine packaging plants. “Not only will the land remain as open space, it will continue to support our Glens Falls paper mill and provide jobs and recreational opportunities for the Adirondack economy.”
Adam Blumenthal, Managing General Partner of Blue Wolf Capital Management, said, “We are proud to have made the responsible sale of the forestland an integral part of this transaction. For many years, divesting forestland has been a strategy undertaken by most successful paper companies. We are pleased that today’s announcement provides for ongoing stewardship of the land with a focus on recreation and conservation while allowing Finch to focus on the successful, long-term management of its paper mill.”
Day to day management of the land will remain business as usual. Foresters will continue to supervise the harvest of timber in accordance with the Forest Stewardship Council and Sustainable Forestry Initiative certifications. Recreational leaseholders will continue to hunt and fish. Sightseers will continue to enjoy the scenic views along the Blue Ridge Road and other travel corridors bordered by Finch lands.
Commenting on the financing and nature of the purchase, Henry Tepper, New York State Director of The Nature Conservancy, said, “This historic conservation opportunity came together very swiftly. We were so pleased when Atlas and Blue Wolf contacted us to gauge our interest in the land. The Conservancy quickly mustered all of its resources to acquire this important property. By extending loans with favorable terms to TNC, OSI and John Hancock provided critical pieces of the financing for what is now our largest land purchase ever in New York State.”
“We applaud TNC’s acquisition of the former Finch lands” said OSI President Joe Martens. “It represents a new era of conservation in the Adirondacks that will take into account local, regional and statewide needs.”...
“Finch, Pruyn has been an outstanding steward of this beautiful and bountiful land. We look forward to carrying on the company’s proud tradition of sustainable forest management while also preserving the property’s natural and scenic riches,” said Meredith Prime, Board Chair of The Nature Conservancy’s Adirondack Chapter.
John Hancock Life Insurance helped to facilitate both the land and business sales announced today. Hancock provided significant debt financing to The Nature Conservancy to facilitate the purchase of the woodlands and equity and debt financing to Finch Paper Holdings for the purchase of the manufacturing facility assets of Finch, Pruyn.
Ken Hines, team leader of the Paper and Forest Products team at Hancock, said, “We have been a lender to Finch, Pruyn since 2004 with a mortgage on these lands. This marks one of several conservation transactions we’ve done with The Nature Conservancy. We have been fortunate to be a partner with Atlas on its previous paper investments and are very pleased to be partners again at Finch Paper Holdings.”
March 21, 2004
CONCERNS RAISED OVER CONSULTANTS TO PENSION FUNDS
By MARY WILLIAMS WALSH, New York Times
A small but growing part of the $2 trillion in state and local pension funds is being steered into high-risk investments by pension consultants and others who often have business dealings with the very money managers they recommend. After making such investments, a few of these pension funds have come up short, forcing the governments to draw on tax dollars.
The Securities and Exchange Commission is so concerned that it has begun an inquiry into the practices of pension consultants, who serve as gatekeepers for thousands of money managers.
The regulators will find not just financial consultants but a web of intermediaries -- marketing agents, lobbyists, brokers and world leaders -- between pension funds and the investments they choose.
Some play surprising roles. Former President Bill Clinton meets with pension trustees on behalf of the Yucaipa Companies, a private firm that seeks financial returns through social investing. Ehud Barak, the former Israeli prime minister, persuaded the Pennsylvania teachers' pension fund to commit $125 million to SCP Private Equity Partners, a firm that invests in Israeli military technology. New York's former state comptroller, H. Carl McCall, encouraged the Illinois teachers' pension fund to place $20 million in Healthpoint, a private firm that invests in orthopedic devices companies.
Some pension consultants play host to gatherings that showcase such famous people to pension officials. Money managers may pay tens of thousands of dollars to participate and often supply the marquee talent. Consultants, meanwhile, are being paid by the pension funds to track and rate the money managers but may take money from the managers for other services.
Under the consultants' watch, more money is flowing into private or alternative investments, which are not publicly traded like stocks and bonds and whose performance cannot be tracked in any agreed-upon way. Private investment pools attracted virtually no state pension money a decade ago, but the typical state pension fund now has nearly 5 percent of its assets in them, and some states have far more.
Though such unregulated investments offer the potential for high returns, they carry more risk than conventional stocks and bonds. A few governments have lost money. Richard Holbein, a pension consultant in Dallas, put the Arkansas teachers' pension fund in touch with Andrew S. Fastow, then chief financial officer of Enron, who was pitching investments in one of Enron's off-balance-sheet entities. Arkansas committed $30 million and may have lost it all.
Another of Mr. Holbein's clients, the Louisiana teachers' pension fund, committed an unusually large part of its portfolio to private equities and other alternative investments at his recommendation. Because of recent losses, Louisiana and its taxpayers must contribute $589 million to the pension fund -- $147 million more than last year.
Louisiana fund officials and Mr. Holbein say that private equity tends to be a volatile investment with unexpected swings from year to year, but the overall approach remains sound and does not present a long-term problem for the fund.
In other cases, pension money is landing in investments that deduct big fees. Some of the costs may not be clearly disclosed, and some may be wholly unnecessary.
The Chicago teachers' pension fund was about to commit $35 million to a Boston real estate partnership last December when one official noticed that nearly 2 percent of the money would go to the consulting firm of Edward M. Kennedy Jr., the senator's son, which the real estate developer had retained to market the investments. Normally, pension funds are not billed for marketing fees. The teachers' fund refused to pay and was permitted to invest anyway.
Specialists say the structure of public pension funds leaves them particularly vulnerable. Fund boards are responsible for investing hundreds of millions of dollars, but only the biggest ones can afford professional investment staffs. Public trustees are often drawn from the ranks of firefighters, teachers and other public employees whose retirements they are protecting. They often have little financial training and are expected to serve as volunteers. Most public funds therefore rely heavily on consultants, even though the consultants may have business ties with the very money managers they are supposed to help select.
''In my opinion, there is a mismatch,'' said Brian N. Minturn, who was fired last year by the Louisiana teachers' pension fund. He said he was dismissed after he raised concerns that the prominent Dallas investment firm of Hicks, Muse Tate & Furst was plying the trustees and their consultants with food and drink, and taking them on golf excursions, hunting trips and other outings that he thought distracted them from their fiduciary duty to vet investments prudently. An ethics panel ultimately found that some pension officials, Mr. Holbein and Hicks, Muse had violated state ethics laws.
''On the side of the pension fund, you may have food-service workers on $35,000 a year, and they never get to do any of this kind of stuff,'' he said. ''And on the side of the alternative investments, there is very high-powered talent, and very strong motivations, to go out and get whatever you can.''
What the investment community wants, of course, is big blocks of money.
''If you look at where the money is, it's kind of what Willie Sutton said about why he robbed banks,'' said Mr. Minturn, who once worked for Fidelity Investments and the Invesco funds. ''Pension funds are just these huge piles of money.''
Consultants and many pension fund officials say that they are not being swayed by business relationships, and that private equities are an important tool in their portfolios, when used in moderation.
''Our board does believe in diversifying our portfolio into some active investments that are riskier,'' said Brad Pacheco, a spokesman for the California state employees' pension fund, known as Calpers. ''They do it to add value to the fund.'' In some cases, pension officials say they also choose alternative investments to achieve other goals, like local development.
Mr. Minturn and some other concerned pension specialists said they had no objection to private investment partnerships per se, but questioned the appropriateness of investing public pension money in them. Because the assets are not publicly traded, they cannot be sold quickly to raise cash; they have no listed price, and their performance cannot be tracked or evaluated in conventional ways. They also involve fees much larger than those for publicly traded stocks or simpler investments. They sometimes generate large profits, but not always, and the partnerships are usually structured so that the outside investors -- like pension funds -- bear most of the risk.
A few states and municipalities bar pension funds from investing in private equities. Most states limit these investments to a small share of their portfolios. Data compiled by Wilshire Associates, the investment advisory company, suggests that the average state pension fund had 4.7 percent of its assets in private equities last year.
By Wilshire's count, the Louisiana teachers' pension fund had 18 percent of its portfolio in such investments last year. But when its total commitment over time to various private partnerships is calculated -- and the state cannot really back out of these pledges -- Louisiana had at one point committed 42 percent of its assets to what it calls ''alternative investments,'' according to state pension plan documents.
Mr. Holbein said that Louisiana's investment problems were unforeseeable. Though some individual private equity funds may falter, he said he believed that they could produce higher returns than publicly traded stocks on the whole. He advocated a high level of alternative investments for Louisiana, he said, because a state law requires the teachers' pension fund to accumulate money quickly to reach full funding. More conservative investments will not provide adequate gains, he said.
In December, the S.E.C. sent 12-page letters to about two dozen pension consultants, requesting extensive information about what they do for pension funds, how they are paid and how their pension work may conflict with their other business operations. The agency appears to be trying to learn how often pension consultants work for both sides of the table, receiving compensation from their pension clients and money managers. Lori A. Richards, director of the commission's inspections unit, said the study was still in progress and the commission had not drawn any conclusions.
Pension consultants sort money managers into asset classes and build databases using their own criteria to help trustees compare and select managers. Some consultants also sell their databases and tracking software to money managers and even sell advice on how to achieve higher rankings.
A 2002 audit of Hawaii's pension fund found that its consultant, Callan Associates, had recommended 16 money managers over time -- and 14 of them were paying Callan for marketing advice and other services. ''The consultant's objectivity could be suspect,'' said the state auditor, Marion M. Higa, calling for further scrutiny. She noted that the Hawaii fund's overall five-year investment performance “ranks in the bottom 5 to 15 percent nationwide.”
A Callan spokeswoman said that Hawaii's trustees stood by Callan after the audit, issuing a statement calling it ''a highly regarded investment advisory firm with an unblemished reputation for integrity.'' In a statement, Callan said that it kept its various business lines separate and that it told all money managers that they would not win preferential treatment from Callan's pension consultants by buying other Callan services.
Early this year, Wilshire Associates took steps to make its pension consulting work more independent of its other lines of business, and the leader of its consulting and asset-management units left the firm. '”Wilshire has never participated in 'pay to play,'” a spokeswoman said.
Many consultants hold educational conferences for pension trustees. The trustees pay a modest admission fee or none at all; the costs are borne by money managers, who pay tens of thousands of dollars for the chance to attend and meet the trustees. The more they pay, the more influence they tend to have over content and the more access to trustees, from leading workshops to closer seating assignments.
CRA RogersCasey, a consulting firm, charges money managers $35,000 to $40,000 to send two representatives to its gatherings, which take place at resorts and in the past have featured speakers like retired Gen. H. Norman Schwarzkopf; Colin L. Powell, now the secretary of state; and Mary Matalin, the Republican political strategist.
Mercer Investment Consulting, a large firm that is a unit of the Marsh & McLennan Companies, charges money managers $35,000 to $58,000 a year to attend its conferences. This month, Mercer sent a letter to its clients, telling them it had complied fully with the S.E.C.'s request for information and outlining its other business activities, like software sales and investment conferences.
''Making these products and services available to the broader investment community does not in any way impact our objectivity,'' the letter said.
Bill Clinton addressed at least two public trustees' conferences last year and was well received, said Jack Silver, a former trustee of the Chicago teachers' pension fund who attended both. Mr. Silver has been an outspoken critic of the undisclosed business relationships of pension intermediaries, but he said Mr. Clinton made useful remarks about the economy -- not a sales pitch -- and that the trustees benefited from his appearance. So, he added, did Mr. Clinton's sponsor, Yucaipa. ''It's marketing,'' Mr. Silver said. ''When you have somebody like him, people remember.''
Yucaipa's managing partner, Ronald W. Burkle, is a billionaire and has been a substantial donor to many politicians, including Mr. Clinton and several past and present trustees of Calpers. In 2001, Calpers voted to commit $450 million to three Yucaipa private investment funds, which are designed to generate returns and societal benefits, by financing neglected businesses in poor neighborhoods and companies that treat workers conscientiously. Calpers' most recent annual report showed that these funds have drawn about $51 million in total investments and related fees, and have so far not produced returns.
A Calpers spokesman said that private investment funds routinely draw on the partners' capital in the first few years, and pay returns only later. He also said the commitment to Yucaipa's funds is only a small part of Calpers's $164 billion portfolio. Yucaipa said its fledgling investments were poised to bear fruit, but it could not provide additional information last week.
Some pension officials say they find the out-of-office politicians useful liaisons. Jon Bauman, the executive director of the Illinois teachers' pension fund, said his board had been considering an investment in Healthpoint when Mr. McCall became vice chairman. His arrival ''added to a favorable opinion,'' Mr. Bauman said.
# # #
MORE TO COME
Meanwhile, you can peruse more buzzard poop by flying to....
AIG: The American Idol of Greed
Aloha Airlines: Flying with the Bankruptcy Buzzards
Tracking The Flock of AIPAC Vultures
Bank of Hawaii: Behind the Blinds
Buzzards in the Halls of Justice
Chasing Down the Cerberus Vultures
Citigroup: Vampires in the City
Confessions of a Whistleblower
Conseco: Birds in the Trailer Park
Dirty Money, Dirty Politics & Bishop Estate
GM: Possessed by Legions of Demons
Marsh & McLennan: The Marsh Birds
Marsh & McLennan’s Mercer Consulting
Nests of the Insurance Vampires
The Eagle Hooded: The 9-11 Coverup
Ron Rewald: Flying High in Hawaii
Sukamto Sia: The Indonesian Connection
The Vultures in Maunawili Valley
Vultures in The Nature Conservancy
~ o ~
FAIR USE NOTICE. This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.
For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.
Originally posted: November 14, 2007, by The Catbird
Last Updated: September 30, 2010
© 2009 by Bobby N. Harmon